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Non-Disclosure Agreements: When and How Should Companies Use Them?

  • Nov 5, 2018
  • Dianne G. Moretzsohn
  • By Dianne G. Moretzsohn

You may have seen Non-Disclosure Agreements (NDAs) in the news lately in connection with the #MeToo movement. NDAs that require victims of harassment to remain silent have triggered conversations among employers, lawyers, and even legislators regarding the appropriate use of NDAs. However, NDAs can still be useful for protecting your business and valuable proprietary information.

When should companies use non-disclosure agreements?

  • NDAs, when written appropriately and used effectively, keep knowledge, trade secrets, product or client information, strategic planning, and other information within the company and confidential. If your company works with information that is greatly limited outside of your organization, warrants secrecy or high-level security, is uniquely valuable (i.e. a specific recipe or proprietary technology), requires a great deal of investment of time or money to develop, and/or would be difficult to replicate, you may want to consider an NDA. If you are invested in or required to keeping proprietary information private, an NDA is often put in place.

What should be included and what happens if the NDA is violated?

  • It is important to include specific details about what information is and is not protected by the NDA, and the specific consequences for violating the agreement. If an NDA is violated, the enforcing party may seek injunctive relief to obtain a court order to prevent any further violations, and may also pursue damages for breach of contract and possibly attorney fees.

Is an NDA enforceable in a sexual harassment case?

  • NDAs are generally legally enforceable contracts, however, if they appear to silence victims of harassment or sexual assault, as seen in the #MeToo cases, they may be challenged. The argument is that NDAs which silence victims of harassment or sexual assault serve to cover up illegal conduct.  Currently, NDAs cannot be enforced to prohibit employees from making claims of harassment or discrimination to the Equal Employment Opportunities Commission, or other anti-discrimination agency.  However, in the wake of the #MeToo movement, several states, including New Jersey, New York, Washington and Maryland, have introduced or passed legislation that also prohibits the use of NDAs in discrimination and harassment settlements. 

What should you know?

  • If you are currently using an NDA with your employees, it is a good idea to have it reviewed by an attorney to ensure that your company’s confidential information is sufficiently protected.  If you include non-disclosure language in your separation agreements, you should review them with legal counsel to determine whether such language is appropriate and lawful in your state in harassment cases.

If you have any questions, our Employment Law attorneys are available to assist. We also provide training on topics such as non-disclosure agreements, the FMLA, the ADA, sexual harassment, and can curate a presentation specific to your needs. Contact Dianne Moretzohn or Patrice Turenne to learn more.

DISCLAIMER: Although McCausland Keen + Buckman always strives to provide accurate and current information, the foregoing is intended for general informational purposes only, shall not be construed as legal advice, and does not create or constitute an attorney-client relationship.

Dianne G. Moretzsohn

about the author

Dianne G. Moretzsohn

Dianne provides practical guidance to business owners and executives on employment law and related litigation.

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